Determining when is the right time to take advantage of your home equity is a tough decision for most homeowners. Some worry that they may not be able to pay back a second mortgage and some don’t apply for a second mortgage because of fear that they won’t be approved or that the process would be too difficult.
The truth is, using a second mortgage is a powerful financial tool that homeowners can use to their advantage, more so if they are struggling to get approved for an unsecured loan.
Why Apply for A Second Mortgage
People get second mortgages for a variety of personal reasons, mostly when they need a significant amount of money quickly. Reasons usually range from wanting to invest in another property, having a tough time financially, wanting to renovate their home, consolidating credit card debt, or securing bridge financing. Add to this the fact that the interest rates for second mortgages are currently very low, then the appeal of getting a second mortgage is understandably quite strong.
Assess If You Really Need A Second Mortgage
Second mortgages come with good benefits but is still a huge financial responsibility. It is only smart to try to look for other options that may be better and with fewer risks. After all, using your home as a collateral is not to be taken lightly. You can take a look into possibly opting for a personal loan or a cash advance. They do come with strict requirements such as having a good credit and a stable job and have a higher interest rate, but if you only need a small amount, then they can be better options for you.
If your needs can’t be met by the other options above, or if your qualifications for their requirements are a bit lacking, then a second mortgage would be the right choice for you. Ask yourself if you can afford paying off the second mortgage and what are you going to so should you decide to sell the house later. It’s about anticipating your future needs and planning ahead too.
Second mortgages do come with attractive benefits too, such as low interest rates, can be easier to pay off, and with more borrower-friendly application. Another thing is that because they are secured through your equity, you will be able to borrow a larger sum as compared to other types of loans.
How to Secure A Second Mortgage
You can get a second mortgage by applying to a trust company, a major bank, or a private mortgage lender. Generally speaking, the best interest rates are offered by banks although their requirements are often very strict. Your best option if you can’t meet most banks’ lending requirements is approaching a private mortgage lender or a trust company.
Choosing which one would be best for your needs and means can be very tricky. The process may also require more paperwork than you think. That is where professional mortgage brokers like us from Homebase Mortgages come in. We take care of the details to ensure you are well taken care of and you get approval for your application the soonest time possible.